Homeowners continue to fall victim to scam artists operating bogus mortgage modification programs. In California alone, more than 4,500 complaints are being investigated by the state Department of Real Estate (DRE).
“With so many people struggling to stay in their homes, foreclosure rescue and mortgage relief scams have risen dramatically,” DRE Commissioner Jeff Davi said.
DRE has investigated over 4,500 cases that involved loan modification complaints, Davi said. These cases have resulted in 244 desist and refrain orders to halt illegal operations that name 785 separate respondents. In addition, the DRE has filed 88 accusations against 159 different real estate licensees for violating the real estate law in connection with offering loan modification services.
The typical scam involves the promise of a loan modification or other mortgage or foreclosure relief in exchange for an upfront fee, but once the fee is paid little or nothing is done to help the homeowner.
Helpful consumer tips on how to avoid such scams include:
Never pay an upfront fee for loan modification services. Such fees are illegal. Advance fees for short sale, deed-in-lieu of foreclosure and other residential mortgage foreclosure rescue services are also illegal under a new federal rule, with a very limited exception for fees paid to lawyers.
Watch out for promises of guaranteed success. No one can promise that a loan modification or other relief plan will be successful.
Too good to be true testimonials. False claims of successes are often the hook to get consumers to pay upfront fees.
Ask questions - lots of them! Check with the Better Business Bureau, and verify licenses and disciplinary records (if any) of those offering their services.
Perform Internet searches, such as Google. Often consumers will post information about unscrupulous operators well before regulators can act.
Contact a HUD approved counseling agency that can provide loan modification or other mortgage negotiation services for free.
Do it yourself. You do not need anyone to represent you to obtain a loan modification. The DRE has Frequently Asked Questions on how to seek and negotiate a loan modification, and it can be accessed at http://www.dre.ca.gov/faq_home.htm
